Correlation Between Ur Energy and Cameco Corp

Can any of the company-specific risk be diversified away by investing in both Ur Energy and Cameco Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ur Energy and Cameco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ur Energy and Cameco Corp, you can compare the effects of market volatilities on Ur Energy and Cameco Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ur Energy with a short position of Cameco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ur Energy and Cameco Corp.

Diversification Opportunities for Ur Energy and Cameco Corp

0.86

Correlation Coefficient

Ur Energy  Cameco Corp

Very poor diversification

The 3 months correlation between URG and Cameco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ur Energy and Cameco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameco Corp and Ur Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ur Energy are associated (or correlated) with Cameco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameco Corp has no effect on the direction of Ur Energy i.e., Ur Energy and Cameco Corp go up and down completely randomly.

Pair Corralation between Ur Energy and Cameco Corp

Considering the 90-day investment horizon Ur Energy is expected to generate 3.54 times less return on investment than Cameco Corp. But when comparing it to its historical volatility, Ur Energy is 1.01 times less risky than Cameco Corp. It trades about 0.06 of its potential returns per unit of risk. Cameco Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,084  in Cameco Corp on August 30, 2024 and sell it today you would earn a total of  1,697  from holding Cameco Corp or generate 41.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ur Energy  vs.  Cameco Corp

Ur Energy

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ur Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ur Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Cameco Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cameco Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Cameco Corp revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ur Energy and Cameco Corp

The main advantage of trading using opposite Ur Energy and Cameco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ur Energy position performs unexpectedly, Cameco Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cameco Corp will offset losses from the drop in Cameco Corp's long position.

The idea behind Ur Energy and Cameco Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.